The recent attention to the gender pay gap has exposed the extent to which women are underrepresented in senior and highly paid roles, but there is similar cause for concern in many parts of the globe in relation to underrepresentation of certain ethnic groups. While this issue is more complex in many regards, there is a clear business case for action.

Click here to read the article which discusses the complexity of the ethnicity pay gap and spotlights two jurisdictions: South Africa and the United Kingdom.

]]>https://www.theemployerreport.com/2019/01/a-closer-look-at-ethnicity-pay-gaps-spotlight-on-the-uk-and-south-africa/feed/0You’re Invited! California Employment & Compensation Update | Los Angeles, CA | January 24, 2019https://www.theemployerreport.com/2019/01/youre-invited-california-employment-compensation-update-los-angeles-ca-january-24-2019/
https://www.theemployerreport.com/2019/01/youre-invited-california-employment-compensation-update-los-angeles-ca-january-24-2019/#respondThu, 10 Jan 2019 00:22:55 +0000https://www.theemployerreport.com/?p=3711Continue Reading…]]>Join us at 3:00 pm Thursday, January 24 for our California Employment & Compensation Update in our new Los Angeles office. A range of topics will be covered during our program which will begin with a panel discussion addressing emerging trends in advancing corporate Diversity & Inclusion goals, followed by your choice of updates on California employment law issues or on global share plan developments. After the program, we invite everyone to join for cocktails and hors d’oeuvres at Javier’s Century City.

Click here to view the full invitation for more details, including a description of the panel discussion and choice of updates. Click here to register.

If you have employee headcount in Canada, be sure to catch up on the top 10 developments from 2018 . . .

Legalization of recreational marijuana. Across Canada, the legalization of recreational cannabis has had a significant impact on employers, requiring them to implement changes to their workplace policies and procedures. The legalization of recreational marijuana has placed a spotlight on issues resulting from current technological limitations of testing for “current impairment”, and has required employers to adapt to the idea of a controlled substance that is legal for both recreational and medicinal use.

Ontario introduces, and largely reverses, major workplace legislation reforms. Ontario’s Bill 148, the Fair Workplaces, Better Jobs Act, 2017,introduced a wide range of changes to workplace legislation, including increases to minimum wage, paid vacation, and protected leave time, as well as new “equal pay for equal work” requirements. A majority of these changes came into force in 2018. However, on November 21, 2018, the new provincial government reversed most of these changes under Bill 47, the Making Ontario Open For Business Act, 2018.

Alberta implements major reforms to workplace legislation. The Alberta legislature passed comprehensive amendments to its workplace legislation, most of which took effect on January 1, 2018. These changes were enacted through Bill 17, the Fair and Family-friendly Workplaces Act; and Bill 30, An Act to Protect the Health and Well-being of Working Albertans, including enhanced leave and vacation entitlements, the implementation of a new administrative penalty system under the Employment Standards Code, the expansion of “card-based certification” for new unions, and other changes to legislation regarding occupational health and safety and workers’ compensation.

Major changes to Quebec’s workplace legislation. In 2018, the National Assembly of Quebec made significant changes to the province’s workplace legislation under Bill 176, An Act to amend the Act respecting labour standards and other legislative provisions mainly to facilitate family–work balance. Changes include expanded leave entitlements, the inclusion of “sexual harassment” as a form of psychological harassment, the prohibition of any distinction based solely on hiring date in relation to pension plans or other employment benefits, and changes to directors and officers liability.

British Columbia initiates workplace legislation reform. In June of 2018, BC’s Employment Standards Act Reform Project Committee issued recommendations for amendments to British Columbia’s Employment Standards Act, including enacting the right to refuse overtime in circumstances where overtime would conflict with certain family commitments, changes to overtime averaging requirements, and enhanced leave entitlements. On October 25, 2018, the BC government released the report of the Labour Relations Code Review Panel, recommending several amendments to the Labour Relations Code, including shortening the time between the filing of an application for certification and the certification vote, expanding remedial certifications, and expanding the statutory freeze period. It is very likely that these recommendations will give rise to substantial changes to BC’s workplace legislation in 2019.

Ontario’s Pay Transparency Act, passed and put on hold. On May 7, 2018, Ontario’s former provincial government enacted Bill 3, An Act respecting transparency of pay in employment. The Pay Transparency Act was set to take effect on January 1, 2019, requiring Ontario employers to publish a salary rate or range in all publicly advertised job postings, prohibiting employers from asking candidates about their past compensation, and eventually requiring employers to post pay transparency reports online. However, Ontario’s new provincial government passed legislation on December 6, 2018, effectively placing the Pay Transparency Act on hold. It is likely that the Pay Transparency Act will be significantly amended or repealed by the new Ontario government in 2019.

Ontario’s Police Record Checks Reform Act. As of November 1, 2018, Ontario legislation established three standard types of police records checks in Ontario, and set a procedural framework for executing the checks. This legislation is helpful in reducing the likelihood that unnecessary information will be disclosed to employers during the police record check process, and will reduce the confusion that has resulted from having different police record check processes administered in different regions across Ontario.

Asset purchasers free to offer employment on new terms. On August 2, the Supreme Court of Canada refused leave to appeal the decision in Krishnamoorthy v Olympus Canada Inc, 2017 ONCA 873. In that case, the Ontario Court of Appeal ruled that, when a business’ assets are sold (as opposed to its shares), and the purchaser offers new employment to that business’s employees under different terms and conditions, the resulting employment contracts are generally enforceable, assuming they comply with employment standards legislation. In other words, new offers of employment in the context of an asset sale are fundamentally distinct from new offers of employment in the context of a share purchase, where the enforceability of amendments are often unenforceable for lack of “fresh consideration”.

Two Ontario Court of Appeal cases give rise to further uncertainty regarding the enforceability of termination clauses. In Amberber v. IBM Canada Ltd., 2018 ONCA 571 and Nemeth v. Hatch Ltd., 2018 ONCA 7, the Ontario Court of Appeal sought to clarify and limit the contractual language threshold for ousting the common law entitlement to reasonable termination notice. These cases will strengthen the employer’s enforceability argument in many cases. However, it continues to be difficult to resolve apparent inconsistencies in the case law, and to predict what will occur in the litigation of each particular case.

Increased legal scrutiny for benefits plans that make age-based distinctions at age 65. In Talos v. Grand Erie District School Board, 2018 HRTO 680, the Human Rights Tribunal of Ontario concluded that the applicant had been discriminated against on the basis of age as a result of the statutory exception that permitted the elimination of his benefits when he reached the age of 65. The HRTO therefore determined that Mr. Talos’ rights under s. 15(1) of the Charter had been infringed. Furthermore, the HRTO held that, although the financial viability of benefits plans was a pressing and substantial objective, the government’s decision to legislate the statutory exception was not justified because it was not necessary to preserve the financial viability of benefits plans. This case strongly suggests that the statutory exception will be the subject of further litigation, and that benefits plans that make age-based distinctions for employees after reaching the age of 65 will now be subject to serious legal scrutiny.

Gender pay gap and pay equity are big discussion topics for companies around the world as more and more countries enact laws intended to close the gender pay gap and as case law develops involving discrimination claims related to pay equity. Beyond strictly legal obligations, many companies also face shareholder and employee pressure for increased transparency around diversity and gender pay.

The Gender Pay Gap vs. Pay Equity

In brief, the gender pay gap relates to the average difference in pay between men and women within an organization. By contrast, pay equity or equal pay relates to the question of whether men and women are paid equally for equal work and whether any disparity in pay for equal work is discriminatory. Many organizations have a gender pay gap; this is typically influenced by a variety of issues, but particularly by the lack of women at senior levels of the organization. A gap does not necessarily mean there is discrimination either in relation to pay or progression, but identifying and analyzing unexplained differentials can be the first step in furthering a company’s diversity and inclusion goals.

Most countries have legislation prohibiting discrimination in respect of employment decisions and requiring equal pay for equal work. But the gender pay gap has been slow to close, prompting a number of countries to introduce more stringent rules. These range from requiring at least some employers (usually if their employee headcount exceeds certain thresholds) to report publicly on their gender pay gap to more aggressive regulation such as disclosure of compensation paid to peers and bans on requiring job applicants to disclose their previous salary. EU countries and some US states are at the forefront of these efforts, but it is expected other countries around the world will follow suit (if they have not already).

Assessing Risk

Companies are well advised to get in front of these issues by assessing their own (potential) gender pay gaps and any risks related to discrimination claims for lack of pay equity. This usually involves a pay audit at least in the countries in which gender pay gap reporting is required or expected to be required. It is advisable to engage legal counsel to keep the audit under legal privilege since pay audits (even where voluntary and confidential) may otherwise be disclosable to would-be claimants in litigation.

Defining “Pay”

When conducting an audit and/or preparing for (public) gender pay gap reporting requirements, an important question is how to determine the items of compensation that need to be factored in to determine “pay.”

Share-based compensation does, in many cases, comprise a big (if not the biggest) element of an employee’s total compensation. Therefore, it does make sense that many countries that mandate gender pay gap reporting require (either expressly or implicitly) that share-based compensation be included when determining (and reporting) an employee’s pay. For instance, the UK’s 2017 Regulations require covered employers to report the difference in mean bonus pay between male and female employees. “Bonus pay” is defined to include shares, share options or restricted shares, among other things. (For more on the UK Regulations, please see here.)

How to Calculate the Value of Share-Based Compensation

However, what is not always clear (or consistent) is how to calculate or value share-based compensation. Different approaches include:

Using the fair value of any share-based award at the time of grant (i.e., equal to the accounting expense for such award),

The amount included in the employee’s taxable income (usually at the time of issuance of the shares after meeting vesting conditions), or

The intrinsic value of all outstanding awards in any particular year.

Any of these alternatives arguably do not represent a “fair” representation of the value of the share-based award. The fair value at grant or the intrinsic value in any given year could be misleading because employees may never actually benefit from the award if vesting conditions are not met. On the other hand, relying on the taxable income could differ from country to country depending on local tax laws (e.g., some countries view vesting/exercise of an award as the income tax event, while others allow deferral of tax until sale of the shares) and, at least in the case of options, employees decide when to exercise the options so the income could vary significantly from year to year.

We are far from reaching a global consensus on how to value share-based compensation for pay equity or reporting purposes, and in some countries, further clarifications (and possibly case law) will be required to determine how share-based compensation is to be valued.

Whatever the approach on the calculation of share-based compensation, companies will need to be ready to report share-based compensation as part of the gender pay gap reporting requirements. This may entail working with a plan broker to share relevant data with local entities that must comply with local reporting requirements (keeping in mind data privacy restrictions, which may differ from country to country).

Conclusion

As you can see from the above, although gender pay gap and pay equity considerations are a reality for almost all multinational companies, the details of compliance are complicated and will almost certainly remain in flux for years to come.

To assess your company’s potential exposure for gender pay gap compliance and discrimination claims related to pay equity, working with legal counsel to conduct a pay audit is an important first step. For more information on how we can assist, please see here.

2018 was, without a doubt, another extraordinary year for US employers. The #MeToo movement continues to have a tremendous impact on the workplace. In addition, the thorny issue of how to manage contractor classifications in the gig economy continued to evolve and new DOJ enforcement activity is heightening concerns about no-poaching agreements and other antitrust activity. In 2019, employers will confront a host of new laws in 2019 on topics ranging from sick leave, lactation accommodation, salary history inquiries and much more.

Our 2018/2019 Digest is a fantastic resource to help you navigate the changes ahead and chart your course for 2019.

In the wake of the #HeForShe movement, California recently became the first US state to require companies to put female directors on their corporate boards.

Supporters of the law make a convincing business case for gender diversity, citing rigorous research findings showing companies where women are represented at board or top-management levels are also the companies that perform best financially. Beyond the business case however, there is also a sense that increased representation is critical to discussions and decisions affecting corporate culture and ensuring workplace respect and dignity.

Now is the time to focus on building a strong corporate culture of equality and respect. California is advancing a trend started in Australia and a number of European countries in recognizing the importance of gender-balanced corporate boards. Germany, Italy and the Netherlands all have initiatives in place to boost corporate board representation.

Baker McKenzie is uniquely positioned to guide companies in developing globally compliant corporate diversity and inclusion initiatives, including board compliance issues. Click here for more information on board level D&I initiatives around the globe, and how we can help.

California just became the first state to require companies to put female directors on their boards.

“Given all the special privileges that corporations have enjoyed for so long, it’s high time corporate boards include the people who constitute more than half the ‘persons’ in America,” Governor Jerry Brown wrote in signing Senate Bill 826 into law on September 30. The legislation appears sparked by recent debates around sexual harassment, workplace culture and gender equality, and it comes less than one year after Brown signed the state’s salary history ban.

The new law requires publicly traded corporations headquartered in California to include at least one woman on their boards of directors by the end of 2019 as part of an effort to close the workplace gender gap.

However, should the law survive any possible constitutional challenges, here’s what it does:

All publicly traded companies (whether incorporated in California or not, whether domestic or foreign) whose principal executive offices (according to the corporation’s SEC 10-K) are in California must have a minimum of one female on its board of directors by December 31, 2019;

By December 31, 2021, the required minimum increases to 2 female directors if the corporation has 5 directors, or to 3 female directors if the corporation has 6 or more directors (if the board has 4 or fewer directors, the corporation shall have a minimum of one female director);

The Secretary of State will publish reports on its web site documenting the compliance of covered corporations.

Penalties

For failure to timely file board member information with the Secretary of State, the Secretary of State may impose a fine of $100,000;

For a first violation, a corporation may be fined $100,000;

For a second or subsequent violation, the penalty is $300,000.

Each director seat required to be held by a female, which is not held by a female during at least a portion of a calendar year, counts as a violation. A female director having held a seat for at least a portion of the year is not a violation.

Giving Women a Seat at the Table: The Europeans Are Already There

California’s new law is in line with the broader, worldwide trend of governments, institutions and shareholders paying close attention to the gender gap in pay, participation and leadership. The international response to the gender pay gap takes different forms in different jurisdictions. As we’ve written previously, some countries (e.g. Germany and the UK) have focused efforts on transparency and the gender pay gap, requiring employers to report data about the difference in average pay between women and men. Others have been proactive in requiring companies to increase gender diversity on boards long before California set this new law in motion.

Though the US has no federal requirement for female representation on boards, and no other US state has legislation similar to California’s, several European countries endorsed board quotas years ago. In 2007, Norway was the first country to pass a law requiring 40 percent of corporate board seats be held by women, and Germany set a 30 percent requirement in 2015. Spain, France and Italy have also set quotas for public firms.

We expect that California’s new mandate will accelerate the diversification of boardrooms in this state and beyond. For assistance in developing your company’s compliance strategy, please reach out to your Baker McKenzie employment lawyer.

]]>https://www.theemployerreport.com/2018/10/california-becomes-first-state-to-mandate-female-board-of-directors/feed/0California Clarifies Its Salary History Ban, Making It Easier For Employers To Complyhttps://www.theemployerreport.com/2018/08/california-clarifies-its-salary-history-ban-making-it-easier-for-employers-to-comply/
https://www.theemployerreport.com/2018/08/california-clarifies-its-salary-history-ban-making-it-easier-for-employers-to-comply/#respondMon, 06 Aug 2018 20:04:21 +0000https://www.theemployerreport.com/?p=3379Continue Reading…]]>Since January 1, 2018, California law has prohibited employers from asking applicants about their salary history. Earlier this month, Governor Jerry Brown signed AB 2282 into law to clarify several aspects of the salary history ban.

The original law added Section 432.3 to the California Labor Code. As a reminder, Section 432.3 prohibits employers from relying on the salary history of an “applicant” as a factor in determining whether to offer the applicant employment or what salary to offer the applicant, except in specified circumstances. Section 432.3 also prohibits employers (and their agents) from seeking salary history information orally or in writing, including information about compensation and benefits. Finally, Section 432.3 requires employers, upon “reasonable request,” to provide the “pay scale” for a position to an applicant applying for that position.

Since the ban’s enactment, employers have struggled to interpret some aspects of the statute. For example, employers did not have clear guidance on the meaning of “applicant” or “reasonable request.”

AB 2282 clarifies some of these unanswered questions:

“Pay scale” means a salary or hourly wage range, and not other forms of compensation such as equity or bonus compensation.

“Reasonable request” means a request made after an applicant has completed an initial interview with the employer. Consequently, employers do not have to provide pay scale information to applicants until after they have completed their first interview.

“Applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position. The legislation therefore clarifies that the salary history ban and pay scale requirements do not apply to internal applicants or transfers.

Employers may ask an applicant his or her “salary expectation” for the position applied for. However, employers must still avoid inquiries that might be construed as pressuring an applicant to disclose salary history.

For further information about salary history bans in California and across the country, please contact the Baker McKenzie attorney you work with or any one of our employment lawyers.

Pay equity is a hot button issue for employers in the United States for a number of reasons—reputational concerns are triggered with increasing shareholder demands for transparency; activist investor groups are pushing companies, particularly in the financial services and technology industries, to disclose gender pay data; and, in the wake of pay equity in the news, employees are asking more questions about the issue.

Compounding the pressure, the gender pay gap also can impact talent acquisition. A recent Glassdoor survey found that 67% of US employees say they would not apply for jobs at employers where they believe a gender pay gap exists. The impact is magnified when looking at millennials. Approximately 80% of millennials, as noted in the Glassdoor survey, say they would not even apply for a job if they believed the company had a gender pay gap, which drives home the point that focusing on equality is, among other things, essential for a positive employer brand in the US market.

On June 20, our partners Bill Dugan and Meredith Kaufman presented to the New York City chapter of the ACC on Minding the (Gender Pay) Gap. Along with two in-house counsel panelists, Meredith and Bill discussed strategies for complying with equal pay protections under state and local laws and narrowing the pay gap.

One clear theme of the panel discussion was that pay equity cannot be viewed in a vacuum. As Meredith explained:

With equal pay protections expanding, it’s a critical time for clients to identify and rectify unjustified pay disparities between men and women. An effective remediation plan may include salary increases, but employers also need to address systemic bias and harassment to root out pay inequality.

Another takeaway was the importance of maintaining the attorney-client privilege when conducting pay audits. Bill noted:

We regularly undertake pay audits, including an in-house analysis of data, for our clients. Conducting these audits under privilege allows us to identify potential exposure and advise on strategies to reduce legal risk, while protecting the analysis from disclosure as much as possible.

For more on how Baker McKenzie is assisting clients with their gender pay and pay equity compliance, please visit our Gender Pay Gap webpage.